On August 24th, 2011 — ten years ago today — Apple co-founder Steve Jobs resigned as CEO, leaving the world’s newly minted most valuable brand in the hands of his successor Tim Cook. Just six weeks later, Jobs died. Needless to say, Cook had some big shoes to fill: Jobs is remembered as the visionary CEO and marketer behind the Mac, iPhone, iPad, iPod, iTunes, and the App Store.
A decade later, what has Tim Cook built?
The most valuable and profitable company in the world
Apple is bigger than oil.
A company that turns a web of complex components into sophisticated computing devices now makes more money than those that effectively pump barrels of cash out of the ground. And it’s because Tim Cook meticulously crafted the overseas supply chains to make it so, contracting manufacturers like Foxconn which employ hundreds of thousands of Chinese laborers for Apple’s production lines, and delivering a remarkably steady gross margin for years. In August 2011, shortly before Jobs stepped down, Apple had already briefly passed Exxon to become the world’s most valuable publicly traded company, on the back of Tim Cook’s efforts as COO and interim CEO. Even in 2019, when Saudi Arabia opened up state-owned oil company Saudi Aramco for trading, it didn’t dominate for long: Apple surpassed it last July on its way to a $2 trillion market cap, and Apple is approaching $2.5 trillion now. It’s more profitable than Saudi Aramco, too.
By any metric imaginable, Tim Cook has grown Apple into a behemoth over the past decade. Revenues reached a record $111 billion this holiday season, quadruple what the company saw the same quarter in 2011. Profits more than quadrupled from $6B in Q1 2011 to $28.8B in Q1 2021. The company holds nearly $200 billion in cash, more than double the already-staggering $76 billion it had in 2011, and Apple has more than doubled in size with 147,000 full-time employees — compared to 60,400 the year Jobs stepped down.
As of June 2021, Apple now makes an average of $10,000 every second, $3,600 of which is pure profit. How long ago did you start reading this story? Chances are Apple grossed half a million dollars by the time you finish this sentence.
Apple first quarter revenue:
Q1 2021: $111.4 billion
Q1 2020 $91.8 billion
Q1 2019 $84.3 billion
Q1 2018 $88.3 billion
Q1 2017 $78.4 billion
Q1 2016 $75.3 billion
Q1 2015 $74.6 billion
Q1 2014 $57.6 billion
Q1 2013 $54.5 billion
Q1 2012 $46.3 billion
Q1 2011 $26.7 billion
— Jon Erlichman (@JonErlichman) January 27, 2021
All of these numbers reflect how Cook’s Apple relentlessly pumped out premium products that consumers were eager to buy, steadily improving them year by year, at a pace Jobs’ Apple never did. Between 2013 and 2018, Apple sold more iPhones every single year than it did during the five years Jobs was in charge.
For some, the dollar signs alone are proof Cook has been a complete success. If you spent $1,000 on Apple stock the week Steve Jobs stepped down, it’d be worth nearly $11,000 today, not including dividends.
But measuring Apple by financial performance alone is only half the story. If you were hoping Cook would be a Jobs-esque product visionary, you probably haven’t been quite as impressed.
As the venerable tech journalist Walt Mossberg wrote for us two years ago, Tim Cook’s Apple has yet to produce a truly game-changing hardware product — nothing on the scale of the iPhone, iPad, or Mac. The biggest new Apple products under Tim Cook are either iPhone accessories like the Apple Watch and AirPods, or products his Apple delivered because they were what customers were asking for — like iPhones with larger screens. “Steve was pretty adamant that big phones aren’t something we’re going to do,” says tech analyst and former Apple marketing director Michael Gartenberg, noting it was part of the discussion around the iPhone 6 Plus launch in 2014. “Tim said consumers want it, we’ve got the capability to do it, so we’re going to do it.”
But there have also been some surprisingly public failures, like the unceremoniously canceled AirPower charging pad, the difficult-to-upgrade Mac Pro that Apple admitted was a mistake, and most of all, the shameful five-year saga where Apple’s flagship MacBook laptops had keyboards that just couldn’t be trusted not to break.
And whether he was chasing Steve Jobs’ notion of a post-PC world or attacking it on his own terms, Cook’s Apple spent years focused on the iPad at the expense of the Mac, only to discover it was alienating some of its most important fans: the Apple developers it relied on to create iPhone and iPad apps.
(It’s particularly egregious when you consider that 2013 Mac Pro and 2016 MacBook Pro were supposed to be Apple’s answers to the idea it’d abandoned Mac power users.)
The Apple Watch is now a hit product in a category of one, as Google and others continue flailing to compete. But part of the Apple Watch’s success is simply how expectations lower over time. When it was announced in late 2014 as Cook’s first big new product, it was explicitly introduced as a product innovation on par with the Mac, iPod, and iPhone, with its digital crown touted as “Apple’s most revolutionary navigation tool since the iPod Click Wheel and iPhone Multi-Touch.” The pitch was that it could change your life by changing your health — and that it was a luxury product, too, with an 18-karat gold Apple Watch Edition variant starting at $10,000.
But Apple had to reboot the entire Watch interface and ditch the ultra-luxury versions before finally finding its footing with the Apple Watch Series 3 in 2017. Even now, there’s not a lot of evidence it’s meaningfully improving people’s health, aside from the occasional anecdotal reports about people whose watches detected a fall or a heart rate spike in time to save their life.
Apple’s AirPods, its second big wearable product under Cook, are also a smash hit. But in many ways, AirPods are symbolic of the entire Cook era, where a seemingly obvious idea, executed at scale and tied tightly to the iPhone, becomes not only a business but also a cultural success. “It’s that process, that continued refinement of Apple, that has been Tim Cook’s genius,” says Gartenberg, pointing out how Cook’s Apple did the seemingly impossible by transitioning the Mac away from Intel processors practically overnight.
While it’s too early to tell, the M1 chip may go down as one of Cook’s biggest swings: his Apple channeled the company’s relentless efforts to improve its Arm-based iPhone processors year after year after year into a new M1 laptop chip that blew away the skeptics, upending our entire concept of laptop performance overnight. Jobs may have bought P.A. Semi in 2008 to reduce the company’s reliance on partners to power the iPhone, but by 2011 Apple hadn’t yet introduced its own CPU cores inside an Apple A-series chip, much less its own graphics. Cook’s Apple made it happen, and Cook took a victory lap this April by adding the new M1 chip into the iPad.
Still, both the AirPods and Watch have fundamentally been accessories for the iPhone, not new computing platforms in their own right: standalone Watch apps have not become a booming market. Cook’s biggest promises have mostly yet to pan out: he spent a year after Jobs’ death talking about Apple’s TV efforts, only to totally start over with the Apple TV Plus streaming service. He’s repeatedly said Apple’s greatest contribution to the world would be in health, with the Watch and the Peloton-like Fitness Plus platform the small beginnings of that effort.
And while Cook has teased for half a decade that augmented reality might become a new platform — calling it “a big idea like the smartphone,” “profound,” and “critically important” to Apple’s future — it’s largely just been teasers. Very little has come of ARKit, which brought basic augmented reality apps to the iPhone, since its 2017 debut, and Apple’s rumored AR headset has — if understandably — been a year or two away for the last three years in a row.
The services turn
If Tim Cook stepped down from Apple tomorrow, though, analysts wouldn’t be asking if a product visionary will take his place — they’d be wondering whether the next CEO will continue turning Apple into a services company.
In the second quarter of 2016, Cook and Apple CFO Luca Maestri drew financial analysts’ attention to a remarkable fact it had quietly been disclosing for well over a year — Apple was becoming a services company, too. The App Store and the company’s other paid subscriptions were accelerating quarter over quarter and year over year — and they had raked in $4.8 billion in Q1 2015 alone. In 2017, after pulling in over $7 billion per quarter for three fiscal quarters in a row, Apple declared its services business was the size of a Fortune 100 company all by itself. Last quarter, Apple saw a record $17.5 billion in services revenue, nearly half the size of the iPhone and more than double any other hardware category.
As emails from the Epic v. Apple trial (#10) revealed, the App Store alone had already eclipsed the company’s entire Mac and iPad businesses in 2016, with only the iPhone towering above it. Add movies, music, books, magazines, paid iCloud storage plans, AppleCare, Apple Pay, Apple Music, Apple Arcade, Apple TV Plus, Apple News Plus, and Apple Fitness Plus, and you’ve got a wide array of services collectively pulling in billions.
It’s not clear which of these make a dent beyond the App Store, as Apple stopped talking about Apple Music’s paid subscribers after it hit 60 million in June 2019, and the company still effectively gives away Apple TV Plus for free.
But Cook’s sights are set beyond content services, too: with Apple Pay, the Apple Card, Apple Cash, and the upcoming Apple Pay Later, the company seems to be edging into banking as well, locking in a cut of your transactions at the same time it’s locking you into its software ecosystem.
There is one place that Cook’s Apple admirably won’t go: while some of Apple’s service upsells can be highly annoying, Cook has been a champion for user privacy, calling it “a fundamental human right,” and famously fighting the FBI over requests that, privacy advocates agreed, might lead to governments having backdoors into users’ phones. It’s the rare tech giant that isn’t using your data as a revenue stream.
Some of Apple’s services play goes back to the days of Steve Jobs. One year before he died, he delivered an internal strategy presentation where he declared 2011 the “Year of the Cloud,” and that Apple should “tie all of our products together, so we further lock customers into our ecosystem.” But the majority of Apple’s services today were introduced on Tim Cook’s watch, and Apple Pay in particular should go down as one of the company’s game changing moves — while other phone makers do have a direct equivalent, it was Cook’s Apple that drove instant, seamless, touchless payments across large parts of the world.
The question now is whether Apple can keep up with its all-encompassing pursuit of growth, because after a decade some cracks are beginning to show.
Consumers, competitors, and lawmakers around the world are starting to treat Apple like just another giant company trying to extract revenue any way it can — and as the company has become responsible for a billion devices and 2 million apps, its reputation is starting to take some brutal body blows.
Apple has never apologized so much as it has in the past few years, whether it’s for artificially slowing down older iPhones to preserve their batteries, secretly having human contractors listen to Siri recordings, or backing away from forcing a developer to add in-app purchases.
Even as Tim Cook continues to push Apple as a privacy company, where what happens on your phone stays on your phone, Apple is grappling with the reality of child porn and making potentially worrying privacy concessions as a result.
The company’s embroiled in lawsuits and regulatory scrutiny around the globe alleging the App Store is a monopoly, and while it’s entirely uncertain whether judges will agree, Apple’s own internal emails do a pretty good job of showing how the company values lock-in and favors some developers over others, despite Tim Cook’s testimony under oath.
Even as Apple tries to maintain the image of a technological leader that puts people first, the company has deployed an army of lobbyists to kill regulation it opposes in California, Arizona, North Dakota, Louisiana, and Georgia — where Apple reportedly threatened to pull its investment from a historically Black college if a challenge to its App Store went through. The company has asked the Biden administration to pressure the South Korean government from enacting a similar law. Even as Apple projects an image of its App Store as a trustworthy place to shop, it’s become increasingly obvious that its 500 human reviewers don’t have time to catch the most egregious scams successfully bilking users out of millions of dollars, even though emails show Apple’s been aware of the problem for years.
Cook’s all-important supply chains have consistently been under fire, too, with reports that Apple turned a blind eye to labor law violations in China.
Although Apple prides itself on a culture of secrecy, it’s currently undergoing a wave of employee activism that might change that culture forever in ways beyond Cook’s control — although the company may be illegally trying to control it anyhow.
And even though Tim Cook has touted diversity for many years, and deserves credit for coming out as the first openly gay CEO of a Fortune 500 company, Apple’s own leadership page is still extremely white.
It’s possible Tim Cook won’t be the one to solve these problems. He’s been with the company for 23 years, and he recently told Kara Swisher he probably won’t still be there after another decade has passed. But few of them were problems in the Steve Jobs era: many are a function of the Apple that Tim Cook built.